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Limitation of liability in Engagement Letters

Advice please on what other Accountants put in their Letters of Engagement

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I'm updating my letters of engagement to clients and am struggling with limitation of liability.

'We have agreed that the following parties should be entitled to rely on our work' - would you insert HMRC or use 'There are no third parties that we have agreed should be entitled to rely on the work done pursuant to this engagement'?

'The total liability we will owe to you and any third party we have agreed may rely on our work for any losses in any way connected with any of the services provided to you under the terms of this engagement letter shall not exceed the sum of £???'

I have read that some Accountants use a multiplier of annual fee, whereas others put in a specific amount - can anyone please advise and have you had feedback from clients when instering an amount?

Thanks is advance!

Replies (6)

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By ireallyshouldknowthisbut
12th Mar 2019 14:04

Does your institute have templates?

ICAEW does.

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Replying to ireallyshouldknowthisbut:
12th Mar 2019 14:09

Yes, the AAT do give templates and the above options are delete/amend as appropriate!?

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Replying to SBB:
By Tim Vane
12th Mar 2019 16:02

SBB wrote:

Yes, the AAT do give templates and the above options are delete/amend as appropriate!?

So there is your answer. Delete.

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By Moonbeam
12th Mar 2019 14:30

And the ATT give templates that anyone can access on their website. Have a look and pick the latest one.
It's not safe to do it from scratch unless you're a legal eagle.

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By johngroganjga
12th Mar 2019 14:36

I don’t see any point in the references to reliance by third parties as they are not parties to the letter.

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By Mr_awol
12th Mar 2019 15:50

To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company...……. blah blah blah...….. unless legal or regulatory requirement to do so, our work is not to be made available to third parties...………. blah blah..... we accept no responsibility to third parties...… blah blah.

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